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Thursday, 18 October 1984
Page: 1939


Senator WATSON(11.12) —The Senate is debating cognately some 20 Bills relating to the primary industry of Australia. As Senator MacGibbon said earlier , this reflects the low priority that the Hawke Labor Government gives to these measures. The fact is that in the last days of this session 20 Bills are being debated cognately-not separately, but all thrown in together. At the outset I must declare an interest in the outcome of this legislation. In so doing I point out that my close association with parts of the industry gives me a very good insight into the feelings and attitudes of the people who are being attacked by this Government.

The problems of the beef industry are symptomatic of the problems besetting Australia's industries in general. However, in one very substantial way they are different. They are different because the major problems that have beset the beef industry are beyond its control. Drought and the Government's policies have contributed to the crippling of this industry. The meat export tax, an example of not only government but also bureaucratic intrusion, is one reason why the beef industry, once a tremendously vibrant and growing industry, is now ailing.

Some time ago the Australian Meat Exporters Federal Council convened an emergency conference in Sydney. The following reason was given for convening such a conference:

The worsening crisis in the meat sector and the grave need for confidence to be injected into the livestock sector.

Statistics may indicate the severity of the crisis, but stark statistics can never do any justice to the enormity of the cost to people's lives. An initial recommendation from the Meat Interim Inspection Policy Council for export inspection fees to be waived for two years as an assistance measure was not even submitted to Cabinet by the Ministers for Primary Industry (Mr Kerin). Is that not disgraceful? Does it not reflect the attitude not only of the Minister but also of the Cabinet? It reflects the attitude of the Prime Minister (Mr Hawke) and the low priority that is given to these measures and to this once great industry. What hope has the beef industry really of gaining any relief, assistance or acknowledgment from the Government?

What has happened? Forty-four abattoirs have closed and 10,000 jobs have been lost in the beef industry within the past five years. It is well known that cattlemen and producers made a negative rate of return on their income on capital for every year since 1976-77. The position is getting worse by the day. Despite that, there can be no mistaking the importance of the beef industry to this great nation of ours. Altogether it employs over 100,000 people, 29,000 of these directly in export meatworks. A lot of those people are traditional, hard core Labor supporters, men who have been sacrificed by the Australian Labor Party.

Last year these export meatworks earned $2.3 billion in export income; a tremendous contribution. It is a great industry and it is helping to meet Australia's balance of payments deficit. The beef industry is primarily export- oriented and approximately 60 per cent of the production of meatworks is exported. But it is given a very low priority by this Government in terms of the effort put in by its Ministers. This simple fact has enormous repercussions for this nation's economic outlook, which we now acknowledge is deteriorating rapidly. It is now becoming widely acknowledged that this is the reason for an unnecessary early election.

The pace of economic recovery is expected to slow this year. According to the National Australia Bank as early as last August, the inescapable conclusion is that Australia needs to increase its export orientation. Let me quote from a National Australia Bank document of last August:

Growth in non-farm production should remain broadly unchanged, but there will be a contraction in farm output of about 10 per cent.

Since August commentators have revised their predictions. Farm output is now expected to contract by far greater amounts. Some people have doubled that figure of 10 per cent; other respected authorities have trebled it. In addition, the National Australia Bank and other economic forecasters have warned of the need for Australian industry to regain international price competitiveness. Despite all this, despite what is known and despite what the Government's advisers must be telling it, the Government has sought to add by one piece of legislation within these 20 Bills, up to $30m a year to the operating costs of this industry-a tremendous amount to a vital industry.

Government policies have contributed to the loss of 5,000 jobs in the beef industry. Unless there is a quite radical rethinking of such policies still more jobs will go. This is the tragedy of it all. This Government knows it and it is not prepared to do anything about it. It is prepared to sacrifice jobs. This is not a protected industry but the Government is still prepared to let these jobs go. I think this is something we should not allow to happen. Such losses are not inevitable and by government action they can be avoided. That is the tragedy. The decision to increase meat export inspection charges by up to 200 per cent does not encourage the industry to invest and to create jobs. Moreover, the increase is occurring despite a 20 per cent reduction in cattle and calf slaughtering and a 21 per cent fall in sheep and lamb slaughtering. The figures are likely to fall even lower.

Investment in primary industry is always at best risky and, in the present economic climate, these risks have increased. The overall picture for the industry is not a particularly encouraging one and it is not likely to imporve markedly in the foreseeable future. Indeed, even the Industries Assistance Commission made this clear to the Government as early as 1983. Last year meat exports declined by 28 per cent from the levels in 1982-83-the year of the worst drought in our history. Beef exports fell 24 per cent below the levels of 1982- 83, with substantial losses in the United States, Asian, Korean and other important markets. Last year beef production declined an alarming 16 per cent from the depressed levels of 1982-83. The figures for the current year are unlikely to provide any comfort to the producers.

The Minister for Trade (Mr Lionel Bowen) has announced that the Japanese are about to sign a new four-year beef agreement. While the announcement of an impending agreement is certainly welcome, it cannot be thought to herald in any new great age of prosperity for the industry. But what is not told is that some of these new contracts are not exactly the same as previous contracts. Some of them will perhaps require a greater element of lot fed beef, imposing further costs on to the industry, requiring additional expenditure from those who wish to move into this sort of Japanese market. It is proposed that Australian beef exports to Japan will increase by 2,100 tonnes per year until 1987, rising to an expected level of 119,000 tonnes in that year. Yet the truth is that our share of the Japanese beef market will significantly decline in the next four years. That is the hard fact. Despite those figures, one must not overlook the fact that in the first six months of this year meat exports from Australia to the European Economic Community were also down on previous levels

Another factor is the excess production from the EEC, which will not only affect Australia's exports to the EEC. The action of the EEC of subsidising production could also result in the EEC dumping its meat on some of our traditional markets. So there is that indirect effect as well.

If one examines the ills besetting the industry, it becomes patently obvious that Australia is rapidly declining in importance as a trading partner for many nations. The chief economist of the National Farmers Federation, Mr David Michael, was quoted in the Australian of 16 August as claiming that the Department of Trade-this is serious-was 'hindering trading prospects' for rural commodities. I believe it is appropriate that I raise this in this forum because it is a serious allegation. He went on to say that there existed a real bias within the Department of Trade and the Government against primary industry. The Government must be realistic in its attitude towards trade.

There is a very strong rumour circulating in Canberra that the Government and people within the Department of Trade are asking for the resignation of the entire Trade Commissioner Service within the next 12 months. We understand that arrangements may be made for the reinstatement of some of those people. What is this Government up to? That situation is a real tragedy. Some of the people who have moved from private enterprise are now faced with the prospect within the next 12 months of being required to resign. I ask the Government to deny that because it puts a question mark on our future trading possibilities. I think that must also be considered very seriously in the light of the earlier comments by the chief economist of the National Farmers Federation. We need to trade if we are to survive economically and we need to increase our export trade if we are to grow economically.

Unfortunately, our falling beef exports are symptomatic of our overall declining performance in world trade. It is the tip of the iceberg. Since 1970 Australia's share of world trade has fallen from 1.7 to 1.3 per cent. Should this trend continue unarrested Australia will become a trading non-entity to the rest of the world. We almost certainly do not possess the domestic market capacity to sustain economic growth while simultaneously suffering a decline in export earnings.

It is true that export nations such as Australia are severely disadvantaged by a general decline in world economic activity such as that from which we are now recovering. But how can our exporters even attempt to compete internationally when they are not given any incentive by the Government and are actually hindered by government policies? If one looks around the world one finds places such as New Zealand, the United States of America and Canada-all our principal overseas competitors-contrasting with Australia. They are the recipients of publicly funded meat inspection charges and the like. They get assistance from their governments. What do the beef producers here get? They get nothing but abuse.

The beef export industry is being made to suffer because the Labor Government believes that it can raise revenue by imposing new and higher levels of taxation on that industry. The combination of export inspection charges and a 2.4c a kilogram export levy has imposed, in some cases on the bigger beasts, a total increase in charges of up to 500 per cent. That applies to the top end of the range. The industry believes that in the short term there is a compelling case for assistance to be given to it through a reduction, or even a moratorium, to which my colleague Senator Boswell referred, on export inspection charges.

There are two essential points. The industry and the Government stand divided. A government that talks about consensus is increasingly driving wedges between it and the primary industries of Australia. The Government has claimed that its revised split fee and export tax of 2.4c a kilogram will represent a 20 per cent reduction over the initial increase in charges to $5.50 for cattle. However, the industry claims that this will only increase fees to a significantly higher level than even the 200 per cent increase. Again, the Government and its advisers have not been in touch with the practical realities of how the trade operates.

Let us examine the figures. For large export cattle of up to 300 kilograms the new fee structure will result in total fees of between $9 and $10 a head. The Government has claimed that the additional inspection costs represent less than one per cent of the value of the average beast slaughtered. While this may be true, the implication is that it is an insignificant impost when the increases are up to 90 per cent of the average profit margin of many producers and abattoirs. This is the difference. Gross value comparisons are completely irrelevant. It is the level of profitability that generates investment and employment. But it is this aspect of profitability which the Government has chosen to ignore. It is not interested in profitability; it is looking at the overall gross sale figure and saying: 'This is insignificant'.

I remind the Senate that due to the Government's lack of understanding of business, of its need to make a profit in order to generate investment and employment to get this country going, and its failure to recognise these important ingredients, it is falling down. The Government's new policy has cost jobs. It has reduced export competitiveness thereby lowering national income derived from such exports. It has also imposed new hardships on Australian business which has had a serious flow on effect to transport, packaging and other service industries. Furthermore, the cost effectiveness of the proposed uniform inspection services, to be performed under the auspices of the Federal Department of Primary Industry, is spurious. Yet this is a measure which affects both the industry and taxpayers.

The Victorian Country Abattoirs and Wholesalers Association has claimed that if meat inspection services were conducted by the State, under a contractual basis with the Federal Department of Primary Industry, $9m could be saved. The Government is not prepared to look at any cost saving measure. Despite additional conclusive evidence the Government has failed to adopt the recommendations of the Interim Inspection Policy Council which proposed a two- year moratorium on increases in inspection fees. So, for the beef industry the legacy of this decision is a continuation of uncompetitiveness in the international market.